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Judgment Liens and Their Affect on Real Property

Posted on : January 19, 2016, By: Jeannine Padula Goche
Westchester Real Estate Lawyer

real estate lawyer Jeannine Padula GocheA lien can be placed on real property in a variety of ways.  For example, a lien can be consensual, meaning it was placed against a property voluntarily, or a lien can be the result of a judgment obtained against a homeowner which is then docketed against the property.

A consensual lien is exactly what it sounds like. It is a lien placed against certain property (in this case real property), when the homeowner takes out a loan and pledges the property as security.  In other words, the homeowner signs a security agreement, such as a mortgage, which reduces the risk to the lender by granting them certain rights against the property in the event of a default.  Under these circumstances, a lender will make loan approval conditioned upon the granting of a lien and the lender will “perfect” that lien by recording the security agreement in the county where the property is located.  This act of perfecting provides notice that the loan must be paid off before the property can be sold or refinanced and also establishes the order for repayment in the event there is more than one lien on the property.

A judgment lien, on the other hand, can be perfected against real property without the consent of the homeowner.  This happens when a creditor has either won a lawsuit against the property owner in the Supreme Court where the property is located or wins the judgment elsewhere and later “dockets” it (files it with the County Clerk) in the county where the property is located. This creates an automatic judicial lien on the property.  As a result, the homeowner will be unable to sell or refinance the property without first “satisfying” the judgment and getting the creditor to release the lien against the property.

How is this accomplished?  One obvious way is to pay off the underlying debt and get the creditor to release the lien by filing a “satisfaction of judgment” in the county where the judgment is docketed.  Another way is to negotiate with the creditor and convince them to accept less than the full amount, often in exchange for an immediate lump sum payment amount. Another way of dealing with a judgment lien may be through bankruptcy.  If the underlying property is exempt under state or federal law, the homeowner may be able to avoid the judicial lien by filing for bankruptcy. {For more information on bankruptcy please visit our website at www.babelslawwestchester.com}

Of course, all of the above assumes that the homeowner has the money in hand to make an immediate payment or has the time needed to file a bankruptcy in order to avoid the lien. Unfortunately, in an all too often common situation, the judgment lien is not discovered until the homeowner is already in contract to sell the property and the proceeds of sale are not enough to satisfy the judgment. This could derail the entire deal unless you have retained an experienced Westchester real estate attorney who is able to negotiate effectively on your behalf or, perhaps, find a legal basis for challenging the legality of the underlying judgment.  If so, your attorney may be able to get the judgment vacated by the Court which granted it or get the creditor to agree to release the judgment on their own accord.  For example, our office was recently able to obtain the release of a judicial lien docketed by a well-known financial institution, thus saving our client over $45,000.00 at closing.  While prior results do not guarantee future successes, since all cases are different, the more experienced your attorney has in handling issues like this, the better your chances are likely to be.   For a free telephone consultation please call our office at (914) 725-2268 or email me directly at Jpgoche@babelslaw.com.

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